Praying for one last sequel to “Revenge of the Nerds”

You figure they’ve got to know, right? I mean isn’t this the Propellerhead Presidency populated by the phi beta kappa cast of "Freaks and Geeks" all grown up. Think about them. Imagine high school age Larry Summers and Tim Geithner and Peter Orszag and Rahm Emanuel (heading off to ballet class) and even too-eager-to-please-for-his-skinny-frame Barry Obama. Would you have let them eat at your table in the cafeteria? Even if you knew Larry was just a few years away from tenure at Harvard and that Peter O’s voice would actually change, sometime during the second term of the Obama administration? (And if you say you would have eaten with them, then I’m willing to bet that you’ve locked away all your photos of high school or have sold them to the Clearasil company for use in their retrospective documentary "Why I Wore a Ski Mask Through High School.") I bet you Joe Biden wouldn’t have sat at that table unless he thought they would vote for him for student body president. And George W. Bush, he would have just looked at them as a parade of swirlies waiting to happen.

I mean it’s very clear these guys are smart. At least one of them is so famous for being the smartest guy in the room that it has practically become his first name. Which would be charming if he weren’t the one cultivating the do-it-himself-honorific. So you know that they know that addressing the financial crisis is the top priority here in the United States but that just as important is addressing the international dimensions of this crisis, it’s consequences and, especially, it’s causes. So why then are they slow walking dealing with Wall Street — and please don’t say they’ve only had a few weeks to consider what to do. Wall Street was Tim Geithner’s principal focus since 2003. Larry Summers was writing about the problem…brilliantly well, I might add…from the first moment it happened. Both of them and all the others on the team have been in the government before. They were trained by Bob Rubin who was a master of sending the right signals to the markets (whatever may or may not have happened at Citibank or whatever policies should or should not have happened during the Clinton years aside.) Certainly, they ought to know better.
(Though of course, there are unexpected distractions-like the fact that Geithner is home alone at Treasury, a situation made worse by the twin withdrawals from consideration of his nominees to be his deputy and his under secretary for international, the latest in a parade of appointment problems from an administration that simply has set unreasonable rules for entry into public service. See next post on this point.)

But what worries me most is what’s going on regarding international economic policy. Rather, what worries me most is what is not going on regarding international economic policy. The Obama team doesn’t really seem to have any. What little has happened has been meaningless posturing (the G8 ministerial in Italy) or worrisome (signs they won’t be helping get the Doha Round moving and that they are willing to tolerate the new stirrings of protectionism — be they "buy American" provisions in spending bills or going back on U.S. commitments and the economic good sense of letting Mexican truckers have easier access onto U.S. roads. And spare me the lecture on the dangers of Mexican truckers please… they’d have to follow our safety standards and the only thing that would allow you to believe that Mexican truckers somehow lack the right stuff possessed by American truckers, all candidates for the astronaut program, is racism. Well, that and/or pandering to the Teamsters.)

Even more unsettling has been that the more I’ve thought about Gordon Brow…. The more I have thought about Gordon Br….. The more I have…. (As you can see, I can’t even think about that visit by the British PM without drifting off to sleep. But the fact that he is the planet’s only known carrier of narcolepsy is of secondary importance.) The more I’ve thought about his trip, the more I’ve realized that the reason he got the bum’s rush from Obama was not that he is more boring than the snooker reruns that used to be so popular on British TV.

Nope, it’s that Obama & Co. did not want to be too exposed to questions about what they would be doing at the April 2 G20 summit in London or what they thought of Brown’s and other European leaders’ bold calls for action to restructure and recapitalize the IMF and the World Bank or to create meaningful new regulatory mechanisms to restore transparency and order and reduce risk in too-complex, house-of-cards global financial markets.
Yet, Larry and Tim and the rest of the gang know that what we have experienced thus far is not only the first truly global economic crisis in history but that its origins…in the meltdown in mortgage-backed-securities markets…that is a symptom of potentially much bigger problems made possible by the structure and flaws inherent in the global derivatives markets which remain-perversely and potentially tragically-the unstable 800 pound gorilla in today’s global economy. There is no real solution that will not involve creating global regulatory mechanisms with teeth, mechanisms that may be seen as challenging U.S. institutions (and those of other countries) and thus will be said to be undercutting our sovereignty (when in reality the choice is institutions with zero influence over global events or ones that work, between financial risks to U.S. sovereignty and an international system that actually preserves and extends it in the only way possible). There is no way to contain the contagion of this crisis among the world’s poorest nations without stepping up and making a major multi-hundreds of billions of dollars commitment to recapitalizing the IMF and the World Bank…and the only way to do that is to pare away some voting rights from the Euros and pass them on to the Chinese, the Indians, the Brazilians, some Gulf countries and others who are the rising class of donors (or donor-borrowers) of tomorrow.

But the early signals are that someone in the White House thinks those subjects are just too hot too handle. Apparently no one as yet has had the courage to argue that the U.S. must lead on these issues, that we Americans cannot simply turn inward, lick our wounds and pretend what happens beyond our borders doesn’t matter.

Indeed, nothing meaningful will happen without U.S. leadership. And that means nothing meaningful will happen unless the Obama team argues forcefully for swift, potent measures to remake and thus revitalize the international system. This will be the first true test of Obama foreign policy and whether this president will rise up to the kind of stature as a statesman that the world hopes he will assume and every American should be rooting for as well. Not only is it essential to America’s economic and political future, but it would be the kind of triumph of intellectual and political courage that would be in every good possible sense, the ultimate, lasting, and best imaginable revenge of the nerds. (And yes, folks, I say that as someone who also would have been sitting at that table. In fact, I can even one up Rahm. Not only did I take ballet…but I taught ballroom dancing in high school. Fortunately however, for me, that was all long before the invention of the camera.)